South Korean regulators have imposed a three-month partial suspension on Upbit, one of the country’s largest crypto exchanges, over compliance failures. The penalties, which include restrictions on new user transactions , stem from violations related to unregistered businesses and customer verification failures . Authorities found that Upbit engaged in transactions with unregistered virtual asset firms and failed to meet anti-money laundering (AML) and Know Your Customer ( KYC ) standards . As a result, from March 7 to June 6, 2025 , new customers will be prohibited from transferring virtual assets. Existing users, however, can continue trading without restrictions. The exchange also faces financial penalties and internal reviews, which could impact its position among South Korean crypto platforms. Upbit acknowledged the regulatory action, stating that it will enhance compliance measures to align with government requirements. "We fully understand the financial authorities’ efforts to stabilize anti-money laundering systems and strengthen compliance in the crypto sector. We will take necessary steps to prevent future violations,” Upbit said in an official statement. Despite the suspension, new customers are still allowed to trade but cannot move assets to or from external wallets, including deposits and withdrawals. The exchange also noted that the restrictions might be adjusted through further regulatory discussions . The Upbit suspension follows months of increased regulatory scrutiny as South Korea works to implement stricter crypto rules. The government launched an antitrust investigation into Upbit five months ago, examining possible monopolistic practices in the country’s digital asset market. A month ago, Upbit faced a temporary suspension due to 700,000 KYC violations, adding to concerns raised in an earlier probe that flagged 600,000 similar violations. These findings led financial regulators to take stronger action against the exchange, marking another step in the country’s regulatory crackdown. The latest restrictions come as South Korea prepares to introduce the second phase of its crypto regulatory framework in the second half of 2025. These measures are part of a broader initiative to establish stricter oversight and consumer protection standards in the digital asset industry. As crypto adoption grows in South Korea, with over 30% of the population investing in digital assets , regulators are tightening controls. Despite these challenges, Upbit has maintained a dominant position in the market. Two years ago, it surpassed global exchanges like Coinbase and OKX in trading volumes , leading among Korean exchanges while some international rivals struggled. Upbit has also made efforts to comply with evolving regulations . Seven months ago, it became the first South Korean exchange to issue a public disclosure under the Virtual Asset User Protection Act , demonstrating a commitment to transparency. While the suspension poses a challenge, Upbit remains a major player in South Korea’s crypto sector. The exchange's response to these penalties will be key in shaping its future relationship with regulators and its ability to maintain its market dominance.
